No real change since MBS MORNING post. Price action is improving as TSYs prices have appreciated and stocks have moved to their lows of the day (now moving higher). The dollar continues to weaken as many global investors are jumping on the "recovery bandwagon" (exiting flight to safety positions in US dollar). This morning Federal Reserve open market operations was indeed a dissapointment to fixed income buyers as it failed to provide a clear indication of whether or not the Fed really is comfortable with the 10 yr note yield hovering around 3.25%. Away from all the postulating and positioning MBS remains super stable but remain alert as the FN 4.0 and FN 4.5 venture closer to profit taking levels....

Par-nertia keeping bids near par most of morning...

and most of the month....

This implies over the next few days your rate sheets will remain stable and range bound just like the MBS market (barring tapebombs...FOMC minutes at 2pm btw). The Fed's grip has tightened and mortgages are heavily supported. The problem: borrowers think rates are going lower. Rate sheets are indeed slightly worse than they were in late April..whether or not they move lower is entirely dependent on the Fed reasserting themselves in the TSY market...specifically it would be helpful if the 10 yr note was trading near 3.00%.

Since 5 pm "Going Out" Marks....

FN30________________________________

FN 4.0 -------->>>> +0-03  to 100-00  from 99-29

FN 4.5 -------->>>> +0-02  to 101-26  from 101-24

FN 5.0 -------->>>> +0-04  to 102-28  from 102-24

FN 5.5 -------->>>> +0-02  to 103-21  from 103-19

FN 6.0 -------->>>> +0-02  to 104-26  from 104-24

GN30________________________________ 

GN 4.0 -------->>>> +0-03  to 99-29    from 99-26

GN 4.5 -------->>>> +0-02  to 101-29  from 101-27

GN 5.0 -------->>>> +0-01  to 103-15  from 103-14

GN 5.5 -------->>>> +0-01  to 104-03  from 104-02

GN 6.0 -------->>>> -0-02   to 104-20  from 104-22

UST10YR: +0-03 yielding 3.239%

2s/10s: 238.28 bps

The Dow  moved off its early morning highs, currently the Dow is  +11 at 8486 and once again moving higher. This illustrates that up down up down sideways type market action we have been witnessing over and over again. Financials continue to moderate equity trading as stock traders are ignoring all signs of bad economic news in favor of ANY sign of economic optimism. Unfortunately the bullish behavior in stocks is subdued by the lingering need for traders to beat fellow market participants to profits. Selling into the rally is obscures the bullish bias...

AT 2PM THE FEDERAL RESERVE RELEASES FOMC MINUTES...stay alert because the FN4.0 and FN 4.5 are nearing profit taking levels.